University Travelers Discuss Asian Business Perspectives On Tariffs

Apr 4, 2018

As the war of words over tariffs between the U.S. and  China escalates, a group of students, alumni and faculty from McGill University have returned from Asia.  While the tariff controversy would appear to be a heated global topic, the group found that it took a backseat to other economic concerns.

On Wednesday, China announced tariffs worth $50 billion on U.S. products including soybeans, whiskey, aircraft and automobiles in addition to previously targeted pork and fruit duties.  The move follows the Trump administration’s threat to impose tariffs on steel, aluminum, electronics and other materials from China.

In March, 30 McGill University undergraduates and about a dozen alumni traveled to Asia on the Canadian university’s annual Hot Cities tour, which examines emerging economies of the world.  Desautels Faculty of Management Professor Karl Moore, who has been organizing the tour for a decade, says they are finding American economic influence diminishing in Asia.  “One of the things we’ve noticed in the last six or seven years is the growing importance of China in that part of the world. It’s really grown enormously. I mean I’ve been going to China or in environs for about 25 years so I’ve noted it even more. But in the last 10 years we’ve seen that. It really struck us this year.  And the second thing, not only with the Trump administration with the Obama Administration, a decline of America’s influence.  Which, we had some American students, but as a Canadian I’m somewhat disappointed that America’s pulled back from that role while China’s filling it increasingly.  So that was a bit of a surprise and a change we’ve seen.”

The Hot Cities group visited Singapore and Malaysia in March as the rhetoric over tariffs and a potential trade war between the U.S. and China began.  Moore says at the time it was of greater concern to the Americans and Canadians rather than the Asian corporate executives.  “They were focused on China and its relationship with those countries. And the idea of a trade war between the U.S. and China really wasn’t a big issue on their mind. It wasn’t germane to their world.  But as Canadians, Americans, Europeans it was a conversation we had in saying is this going to say maybe you should be in this part of the world because it’s going to be more attractive than other parts of the world? It was something we kind of talked about partly because there’s so much growth over there. And you look at the slow growth in Europe, reasonably good growth in the U.S. and Canada but not on the level they have over there.  It made the students think about do we focus on this part of the world for at least part of our careers?”

McGill Desautels Faculty of Management Finance and Strategy student Nirav Sahni found that Asian businesses appeared to discount U.S. economic influence.  “The conversations regarding President Trump came out in one or two meetings.  But the main key takeaway from what we learned was that they were more worried and more focused on their relationship and impact with China and the U.S. sort-of like a bit far out on the other side did not have that direct of an impact on their businesses or their policy or their strategies as did China. So their main focus was on their direct relationship to them rather than the United States.”

The Hot Cities group met with executives from a number of prominent companies including Microsoft Singapore, Uber Asia Pacific, L’Oreal Southeast Asia, Air Asia and Deutsche Bank. There’s more about the Hot Cities tour at wamc.org.